ERISA

The vast majority of group long term disability insurance plans provided by employers fall under the jurisdiction of the Employee Retirement Income Security Act of 1974, known commonly by its acronym ERISA.

ERISA law was intended by its sponsors to ensure that pension plans were managed responsibly, so that employees would actually receive the benefits they were expecting. They wanted to restrict shady investment practices and increase the transparency of plan management. The law was later interpreted to apply to health and disability insurance plans.

Unfortunately, the application of ERISA law to long term disability insurance plans has reduced rather than expanded the legal protections available to policyholders. It left the field wide open to insurance companies seeking to implement a claims policy that is best described as, “When in doubt, deny the claim.”

ERISA law “preempts” (takes precedence over) state laws that can provide a higher level of protection to employees in situations where an insurance company unjustly denies benefits. Under state law, an employee has a right to a jury trial, and could receive damage awards in addition to the benefits due under their policy. Damages could be compensatory, punitive, and, if applicable, based on emotional distress.

ERISA law does not apply to private long term disability insurance policies purchased directly by an individual from an insurance agent. It also specifically excludes long term disability policies where the employer is a church or a governmental entity. For the majority of long term disability claimants subject to ERISA law, the rights and remedies are specified in the 1974 statute, as well as additional regulations promulgated by the Department of Labor.

ERISA law permits the long term disability insurance plan administrator to decide if a claimant is disabled, using the language of the insurance policy and the medical evidence in the claims file. Claimants must exhaust the 180-day appeals process prescribed by the ERISA statute before they can file a lawsuit to obtain benefits. To make matters worse, the courts will usually assume that the plan administrator has made a reasonable decision unless it has acted in an arbitrary or capricious manner.

It is not unusual for an ERISA plan administrator to deny benefits based on one dissenting opinion from a doctor or nurse chosen by the long term disability insurance company. This can happen even if the doctor or nurse is not a specialist, or is less qualified in that medical specialty than the patient’s own doctor.

In spite of these legal obstacles, those disabled from working can be protected under existing law. Benefits are being approved for many people every day. You can raise your odds of prevailing by working with a skilled attorney like those lawyers with Bemis, Roach & Reed.  Our law firm’s office is located in Austin, Texas and we represent individuals throughout the State of Texas, including San Antonio, Houston, Dallas, Fort Worth, El Paso, Galveston and Corpus Christi. We also have a nationwide long term disability and social security disability practice.